How to save more tax under the old regime?

 

By Rajeev Pathak

April 11, 2026

Income above ₹12 lakh? , the old tax regime can actually help you save more, provided you use the available deductions smartly.

Unlike the new regime, the old tax system allows you to reduce taxable income through multiple deductions and exemptions. When used properly, the old regime lowers your tax and helps you build long-term wealth.

In this guide, let’s break down 6 powerful ways to save tax under the old tax regime in India.

Example: ₹15 Lakh Salary – Old vs New Regime

Let’s understand this with a simple example:

• Annual Income: ₹15 lakh
• Deductions claimed:
• Section 80C: ₹1.5 lakh
• Section 80D: ₹25,000
• Home loan interest: ₹2 lakh

👉 Total deductions: ₹3.75 lakh
👉 Taxable income reduces to ₹11.25 lakh

✔ This significantly lowers your tax liability compared to the new regime (where most deductions are not allowed).

👉 Insight: The higher your income, the more valuable these deductions become.

1. Maximize Section 80C to Save Tax under Old Regime

Section 80C is the most widely used tax-saving option.

👉 Maximum deduction: ₹1.5 lakh

Popular options:

• ELSS (Equity-Linked Savings Scheme)
• PPF (Public Provident Fund)
• EPF
• Life insurance premium
• 5-year tax-saving FD
• Home loan principal repayment
• Children’s tuition fees

👉 Smart Tip:
Instead of low-return FDs, consider ELSS for better long-term growth (with market risk).

Relevant Reads: Small Savings Schemes in India: SCSS, PPF, SSY & NSC – Complete 2026 Guide

2. Save Tax using Health Insurance (Section 80D)

Medical expenses are rising, and this deduction helps reduce tax while securing your health.

You can claim:

• ₹25,000 for self + family
• Additional ₹25,000 for parents
• ₹50,000 if parents are senior citizens

👉 Maximum deduction: Up to ₹1 lakh

Includes:

• Health insurance premium
• Preventive health check-ups

👉 Pro Tip:
A separate family floater policy increases both protection and tax savings.

3. Home Loan Benefits: Biggest Tax Saver under Old Regime

If you have a home loan, the deduction is one of the most powerful tax-saving tools.

You get dual benefits:

(a) Section 80C

• Principal repayment (within ₹1.5 lakh)

(b) Section 24(b)

• Interest deduction up to ₹2 lakh

👉 Total benefit: Up to ₹3.5 lakh

Additional benefit:

• First-time buyers may claim extra deductions under 80EE/80EEA

👉 This is why many salaried individuals prefer the old regime.

4. HRA and Salary Benefits to Reduce Taxable Income

If you live in rented accommodation, House Rent Allowance (HRA) can significantly reduce your tax.

HRA depends on:

• Salary structure
• Rent paid
• City

You can also claim:

• LTA (Leave Travel Allowance)
• Standard deduction (₹50,000)
• Special allowances

👉 Tip:
If HRA is not available, you can claim a deduction under Section 80GG.

5. Extra Deductions Most Taxpayers Miss

Beyond common deductions, several options are often ignored:

Important ones:

• Section 80E – Education loan interest (no limit)
• Section 80G – Donations
• Section 80TTA/80TTB – Savings interest
• Section 80CCD(1B) – Additional ₹50,000 (NPS)

6. Why Old Tax Regime Works Better Above ₹12 Lakh

This is the most important insight.

If your income is ₹12 lakh or higher (₹15–18 lakh or more):

👉 You can:

• Claim multiple deductions
• Reduce taxable income significantly
• Build assets (like a home or investments)

✔ Old regime = Tax saving + Wealth creation

👉 Unlike the new regime, which offers simplicity, the old regime allows saving opportunities.

⚖️ Old vs New Tax Regime: Quick Comparison

Feature	Old Regime	New Regime
Deductions	Available	Limited
Tax Rates	Higher	Lower
Best For	Investors & planners	Simplicity seekers

⚠️ Common Tax Saving Mistakes to Avoid

• Investing only in March without planning
• Ignoring health insurance benefits
• Not claiming HRA correctly
• Choosing new regime without calculation

👉 Tip: Always compare both regimes before filing ITR.

FAQs❓

Q1. Is the old tax regime better for incomes over ₹12 lakh?
Yes, if you use deductions effectively, it can reduce your tax significantly.

Q2. How much tax can I save?
Depending on deductions, you can save ₹50,000 to ₹2 lakh or more.

Q3. Should salaried employees choose the old regime?
If they have deductions like HRA, 80C, and home loan, it is often beneficial.

🎯 Conclusion:

If your income is above ₹12 lakh, don’t blindly choose the new tax regime.

The old tax regime rewards disciplined financial planning. It not only helps you save tax but also build long-term wealth.

👉 Before filing your ITR, calculate both options—you might be leaving a significant amount of money on the table.

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⚠️ Disclaimer

The information provided in this article is for general informational and educational purposes only. It is intended to offer a broad understanding of tax-saving options under the old tax regime and should not be considered as financial, legal, or tax advice.

Tax laws are subject to change, and their applicability may vary based on individual circumstances. Readers are advised to consult a qualified tax consultant, chartered accountant, or financial adviser for personal guidance.

The article may have referenced mutual funds or other equity-linked products. Investors should be aware that mutual funds are subject to market risk, and they should read all related documents before making an investment in such instruments.

👉 Bonus Tip:
Combining 80C + NPS can push deductions beyond ₹2 lakh.